Posted by James Strange on July 23, 2003 at 15:29:11:
Nancy,
Good deals are hard to find every where. Do not jump into a deal that you do not profit from. The risk are not worth the reward.
But most of all do not give up. When the right one comes along you will be ready.
James Strange
Ed Garcia - Posted by Nancy
Posted by Nancy on July 22, 2003 at 18:40:37:
Ed please help me with this financing problem. I will try to be brief:
I have a seller and a buyer (father - seller, buyer daughter). The seller needs all cash and the daughter does not qualify for a mortgage.
I stepped in and offered to purchase the house from father and lease option to daughter. Father will finance 10% and will also give his daughter $6,000 option consideration (which i will also use as proof of funds to the bank).
As the deal stands i will put no money down.
Now my broker is saying that closing costs will be 4% of the selling price. The selling price is $219,900 and this is the appraised rate (by a realtor). Daughter wants to split closing costs with me but i can’t come up with $4,000 (approx 50% of closing costs). i can only afford about $1,500. Broker recommended that I ask seller to increase selling price by closing costs - but how would this work if the selling price is already at market value?
Before you suggest that i use the option consideration, i need cash reserves in case these people default (not likely but not impossible either)
Thanks for your time
PS: this is my very first deal
Do you have any other ideas?
Re: Ed Garcia - PS - Posted by nancy
Posted by nancy on July 22, 2003 at 18:43:08:
Ed
I forgot to mention that the seller will absolutely not budge any further. he has cancer and needs his cash. i don’t blame him. He will not budge on the price either.
Re: Ed Garcia - PS - Posted by Ed Garcia
Posted by Ed Garcia on July 23, 2003 at 11:38:39:
Nancy,
OK, I over reacted; it?s not a straw purchase by the manner that you?ve structured the deal. You?ve done a legal job of circumvention, however that doesn?t change the fact that it?s not a deal.
Nancy, the only way this deal could make sense or be considered, is if you did it as a sandwich lease, or purchased it on a land contract.
Why would you risk your credit and your borrowing power, on a deal that you?re purchasing at full market?
Ed Garcia
Re: Ed Garcia - PS - Posted by Ed Garcia
Posted by Ed Garcia on July 23, 2003 at 10:53:36:
Nancy,
1.What?s the purpose of all of this, what do you get out of it?
2.You?re basically doing a straw purchase, meaning that you?re purchasing a property because the intended buyer can?t qualify, so in essence you?re misrepresenting the deal and defrauding the lender.
Sorry Nancy, I don?t see this as a deal and therefore can?t get behind it.
Good luck with what ever you?re doing,
Ed Garcia
Re: Ed Garcia - PS - Posted by Nancy
Posted by Nancy on July 23, 2003 at 13:02:58:
Ed
I feel really foolish now…but I hear what you’re saying. Deal is now officially broken. The problem is that I live in Massachusetts and to find a good deal here is like finding a needle in a haystack. I’m really fired up about investing in real estate but it’s very frustrating. I’m glad you responded though, i really appreciate it.
Thanks
Re: Ed Garcia - PS - Posted by rm
Posted by rm on July 25, 2003 at 22:16:40:
>The problem is that I live in Massachusetts and to >find a good deal here is like finding a needle in a >haystack.
Is this a fact, or is it just your belief based on limited experience and the opinions of others?
There are always deals out there. And if they weren’t needles in haystacks, then there wouldn’t be much profit potential.
Get out there (or better yet, get someone else out there) and start really looking for sellers with problems. Sooner or later you’ll find one. Or more than one. And it doesn’t take that many before you’re making a nice income.